The economic implications of the transition to a low-carbon energy system: a stock-flow consistent model
Authors: Emanuele Campiglio, Antoine Godin, Stephen Kinsella
Abstract: A number of different policies can be implemented to accelerate the flow of investment towards low-carbon sectors, from carbon taxes to ‘green’ financial regulation. This paper presents a small demand-led macroeconomic model aimed at studying the effectiveness of such policies, together with their implications for the wider economic and monetary dynamics. The model features two types of energy-producing capital stocks: a ‘dirty’ one based on fossil fuels, and a ‘green’ one based on renewable sources. The two sectors differ in terms of productivity, capital costs and access to credit. Firms producing consumption goods choose the mix of ‘dirty’ and ‘green’ energy according to energy prices and their set of preferences. The use of stock-flow consistent modelling and simulations allows us to study the transition to green energy capacity in a systemic perspective, explicitly considering the dynamics of the balance sheets of households, firms, government, banks and the central bank.
Investing in a new regime: Confidence and uncertainty in a low-carbon transition
Authors: Eric Kemp-Benedict
Abstract: This paper examines a low-carbon transition using post-Keynesian theory, which assumes fundamental uncertainty. Building on prior work, the paper applies a green-brown capital model in which “green” capital is less productive than “brown” capital in today’s economy, but becomes relatively more productive as it displaces brown capital. The earlier work identified a tension within countries between the need to maintain employment at desired levels and the need to stimulate low-carbon investments, and a tension between countries in that domestic policy outcomes depend on the actions of trading partners. This paper goes on to consider the impacts of behavioral change, such as reduced working time and reduced consumption in high-income countries, and of potentially divergent policies in high-income and developing countries. To capture fundamental uncertainty the paper uses exploratory scenario analysis, with the Shared Socioeconomic Pathways (SSPs), one component of the new generation of global climate scenarios, as a frame.
The transformation of the social relation to energy from the Fordism to Neoliberal capitalism. An macroeconomic and comparative empirical exploration in wealthy countries (1950-2010)
Authors: Louison Cahen-Fourot
Abstract: Drawing on environmental data, this paper seeks to explore the role of the environment in the fordist-compromise as studied by the Régulation School. The environmental dimension is usually lacking in the regulationist analyses, despite some recent progress. We aim at revisiting the institutional compromise of the fordist era in assuming that the exploitation of the environment is a key aspect of the emergence of the fordist accumulation regime with its strong redistribution mechanisms. In the perspective of the emerging ecological macroeconomics, this paper seeks more broadly at enhancing our understanding of the environment as a key component of a particular accumulation regime. Insights from this analyse should help us comprehending the place of the environment in the current finance-led accumulation regime.
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Towards Post Keynesian Ecological Macroeconomics
Authors: Giuseppe Fontana, Malcolm Sawyer
Abstract: The paper proposes a post Keynesian approach to the macroeconomic analysis of sustainability. It explicitly acknowledges that economic growth is a double-edged sword. Growth can help to alleviate persistent levels of high unemployment, but it can also lead to potentially catastrophic environmental problems. Building on the Monetary Circuit theory and the Demand-led growth theory, the paper offers an analysis of the interconnections and interdependence of the economic, biophysical and social worlds and by doing it hopes to provide the building blocks for the establishment of Post Keynesian ecological macroeconomics.
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